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Americans Growing More Pessimistic About Economy

Written by: MainStreet10/08/13 - 3:43 PM EDT

By Hal M. Bundrick

NEW YORK (TheStreet) -- As the U.S. struggles to regain its footing in recovery, the government shutdown is causing Americans to lose confidence in the economy. A Gallup poll reports that two-thirds (67%) of Americans now say the economy is getting worse. That is the highest rate of pessimism since December 2011.

The U.S. economy was on shaky ground before the D.C. disruption. Gallup's Economic Confidence Index saw a slide to -19 for the month of September, compared with -13 in August. But a significantly sharper decline in confidence has been evident most recently, leading to a current -34 three-day average.

The index is based on survey respondents' views of economic conditions and their perceptions of whether the economy is getting better or worse. At this point, 43% of those polled say the economy is in poor shape.

"The White House and Wall Street keep telling us that the economy is improving, and they point to the unemployment rate and other economic indicators. But Americans' confidence in the economy is now much worse than it was in May and June," says Gallup Chairman and CEO Jim Clifton in an analysis. "The American public is clearly seeing and feeling something quite different about the economy than what they're being told. Cheerleading from the White House and Wall Street is falling on deaf ears."

Economic confidence reached rock bottom in late 2008 and early 2009, at the height of the global financial meltdown. Confidence improved later in 2009, through 2010, and into early 2011, but fell sharply again in the summer of 2011, when the nation faced a looming crisis over the possibility of default. The U.S. government once again faces a debt ceiling deadline on Oct. 17.

"The economy grew at 2.5% in the second quarter of this year, according to the U.S. Department of Commerce, which is surely better than the pathetic and anemic 1.1% first-quarter growth," Clifton says. "But in my view, a blended 1.8% means the economy is barely keeping up with population growth, and the economy added only 169,000 jobs in August. No one could be excited about these numbers. From where I sit, we need a minimum of 4% growth for the American economy to boom again."